“With much of the decline this month resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges such as a lack of developed lots and labor shortages,” says NAHB chief economist Robert Dietz. “Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed.”

The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” NAHB has conducted the monthly survey that powers the HMI for the past 30 years.

WASHINGTON, DC—Builder confidence in the market for newly-built single-family homes declined two points in February to a level of 65 on the National Association of Home Builders/Wells Fargo Housing Market Index. It's the second two-point monthly decline in a row for the HMI, which surged six points in December after holding steady at 63 in the final two months of the presidential campaign.

“While builders remain optimistic, we are seeing the numbers settling back into a normal range,” says Granger MacDonald, NAHB's chairman and chairman and CEO of Kerrville, TX-based MacDonald Cos. “Regulatory burdens remain a major challenge to our industry, and NAHB looks forward to working with the new Congress and administration to help alleviate some of the pressures that are holding small businesses back and making homes less affordable.”

The confidence index's results square with those of an index NAHB released last week, the National Association of Home Builders/First American Leading Markets Index. It found that single-family permits are running at just 52% of normal activity, while employment is at 98% and home prices are 147% of the norm.

All three HMI components fell in February, NAHB said Wednesday. The component gauging current sales conditions dipped one point to 71, while the index charting sales expectations in the next six months registered a three-point decline to 73. The component measuring buyer traffic dropped five points to 46.

“With much of the decline this month resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges such as a lack of developed lots and labor shortages,” says NAHB chief economist Robert Dietz. “Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed.”

The HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” NAHB has conducted the monthly survey that powers the HMI for the past 30 years.